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28 May 2009
Comments:2
HM Revenue and Customs (HMRC) could be forced to shell out billions of pounds after a landmark case was won by a mobile phone trader accused of being involved in a fraudulent supply chain.
City law firm Thomas Cooper led a successful appeal in the Chancery Court in London, against the VAT and Duties Tribunal’s refusal to repay almost £1.5m VAT to Blue Sphere Global Limited, under the government’s unpopular Extended Verification scheme.
Sir Andrew Morritt, chancellor of the High Court, ruled last week that HMRC can no longer refuse to refund VAT to legitimate traders, in order to recover unpaid VAT by fraudulent traders.
Further reading
Blue Sphere had unknowingly bought a consignment of mobile telephones from a contra-trader that had been involved in a fraudulent chain known as a ‘dirty chain’. However, Blue Sphere exported the phones in a ‘clean chain’, paying all duties required.
But HMRC decided that Blue Sphere’s VAT payment covered the missing amount in the dirty chain and refused to pay the money back.
Now the government department is facing the repayment, plus Blue Sphere’s legal costs, and Thomas Cooper solicitor Mark Whelan said there are at least 600 similar cases in the pipeline.
“This is not something that is going to go away. It is something that HMRC is going to have to deal with properly,” he said. “Instead of going for the soft targets like our client, HMRC is going to have to go after the proper criminals.”
An HMRC representative said in a statement: “HMRC is considering the implications of this judgment. HMRC is right to tackle fraud in this way – including where there is a contra scheme and we will continue to deny input tax where a trader knew or should have known that its transactions were connected with fraud. We will robustly defend our decisions in the courts.”
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Do you agree?
extended verification
According to reports, it was Gordon Brown who authorised the extended verification process throwing everything into disrepute. This coming from a man who sold the country's gold reserves for peanuts and couldn't possibly understand how best to tackle complex issues
Posted by Anono | 30 Aug 2009
HMRC
The defiance of HMRC in spite of the Judgement on Blue Sphere is astonishing. In effect, they are continuing with the same stance regardless of the legal verdict. Businesses just don't know where they stand anymore. This attitude is devastating to the economy and goes against the purpose of HMRC, and goes against justice and due process.
It's no wonder the country is in recession. How long can this government continue to bend and break the law before realising the error of their ways? A short term fix always has longer term implications and consequences.
Welcome to Gordon Brown's Britain, part of NuLiebour of which HMRC's actions summarise perfectly how badly this government needs to go.
Posted by Anon | 06 Aug 2009
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